Ted Schlein’s 2-year-old Ballistic Ventures has already raised a second $360 million fund

Some years after a shakeup at enterprise capital fund Kleiner Perkins, considered one of its star B2B buyers, Ted Schlein, kind of left to start out his personal agency. Two years in the past, he launched Ballistic Ventures with an inaugural $300 million fund, a laser give attention to cybersecurity, an fascinating enterprise mannequin and a who’s-who of co-founders as basic companions. 

Now Ballistic has already closed a second fund, even larger than the primary. 

“We got down to increase a second $300 million fund and stopped at $360 million,” Schlein instructed For Millionaires.

The previous few months concerned many calls with potential restricted companions (LPs) who requested them about every thing starting from their backgrounds to “should you have been a cat, what sort of cat wouldn’t it be?” However they hit their purpose surprisingly quick given the present VC bear market. Ballistic formally registered its plans for a second fund simply 4 months in the past, in November, For Millionaires was first to report.

Fingers-on with their startups

In an age when some VCs say that being “founder-friendly” means retaining their VC claws out of operations, Ballistic has the polar reverse philosophy.

For example, Founders Fund associate and Anduril co-founder Trae Stephens instructed the group at For Millionaires’s Strictly VC LA occasion in February: “The extra {that a} VC says, ‘I’m going so as to add worth,’ the extra it is best to hear them say, ‘I’m going to bother the ever-living crap out of you for the remainder of the time that I’m on the cap desk.’”

The Ballistic crew scoff on the thought. They at all times take board seats. They discuss to their founders “many instances every week,” Schlein says. As a result of all of them have run cybersecurity companies — they usually solely spend money on safety — their secret sauce is their involvement coupled with their huge community of contacts, they are saying.

“I’ve been at this for nearly 30 years, and I nearly at all times helped ship the primary 10 clients to each firm that I’ve ever been on the board of,” Schlein stated. 

Common associate Jake Seid says that every one of Ballistic’s crew works with all of their portfolio corporations, routinely bringing within the first three to 4 million {dollars} of annual recurring income or serving to rent their first engineers. 

Seid reduce his tooth at Cisco and startups, however is finest referred to as an early Lightspeed associate and for his personal StoneBridge Ventures agency. Ballistic basic companions Roger Thornton and Barmak Meftah have been leaders of threat-hunting change AlienVault when AT&T acquired it. The Ballistic co-founding crew additionally contains Kevin Mandia, the previous CEO of Mandiant, which bought to Google in 2022.

Schlein solely makes new investments from Ballistic’s fund however stays a associate at Kleiner, overseeing his earlier investments/board seats and retaining his “carry” — the % of income — if these startups do properly. 

Early success

Two years in, Ballistic’s strategies seem like working to date. Though they haven’t even absolutely deployed their first fund, they’ve already had one profitable exit of portfolio firm Talon Cyber Safety, purchased by Palo Alto Networks in a deal valued at at $625 million, For Millionaires reported.

It’s not possible to know what number of extra successes they may have. However as a result of Ballistic solely invests in early startups the place it may be the primary institutional cash on the cap desk and takes a board seat, they’ve extra management than different VCs have. 

This helps them, as an illustration, shield their investments from phrases from later buyers that might damage them, similar to “liquidation preferences” that will give one other investor precedence to the money from an acquisition. 

And Ballistic incubates startup concepts internally, discovering folks to construct and run their concepts. There are two such startups in stealth from Fund 1 in the intervening time, the companions say. 

Ballistic expects to wrap up investing out of Fund 1 after, maybe, two extra startups, bringing its whole Fund 1 portfolio to round 20 corporations, and to start investing out of the second fund in one other two months, Seid stated.